Delta Air Lines said on Thursday that it lost $408 million in the final three months of last year, as the Omicron variant of the coronavirus, which emerged late in that period, interfered with holiday operations and pushed back the airline’s recovery.
About 8,000 Delta employees — more than one in 10 — had called out sick in recent weeks, Delta’s chief executive, Ed Bastian, said on CNBC on Thursday. This, along with bad storms, caused the airline and its peers cancel tens to thousands of flights during the busy holiday travel period. Carriers are only beginning to recover.
“While the rapidly spreading Omicron variant has significantly impacted staffing levels and disrupted travel across the industry, Delta’s operation has stabilized over the last week and returned to preholiday performance,” Mr. Bastian said in a statement. “We are confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel.”
Bastian stated that the Omicron variant has delayed airline recovery by approximately 60 days. Delta alone cancelled more that 2,000 flights in the two weeks beginning on Christmas Day. It is the fourth-most cancellations of flights among U.S. airlines.
United Airlines cancelled more than 2,500 flights in that time period. This week, the airline announced that approximately 3,000 employees, or more than 4 percent, had tested positive for the virus. Nearly a third of United employees called in sick at Newark Liberty International Airport during the holidays. This airport is a major hub for United. Nearly all employees of both airlines have been vaccinated.
Despite the airline’s difficult year, Delta said it would spend about $100 million to distribute bonuses of $1,250 to each of its 75,000 employees.
“It’s going to be our recognition and our gesture of thanks to you for the hard work and the sacrifice and the service you’ve made on behalf of our company and on behalf of our customers,” Mr. Bastian said in a video message to employees announcing the bonuses, which will be distributed on Feb 14.
Delta notified the Centers for Disease Control and Prevention (CDC) that the virus could disrupt holiday travel. The agency was asked to reduce the recommended isolation time for those who have tested positive for the virus. This move was also supported by some public health professionals. The agency made that change days later, setting off a feud between Delta and one of the nation’s most prominent airline labor unions, which said shortened isolation periods put workers and travelers at risk.
Although carriers finally recovered from the holiday disarray this week, Omicron is expected to weigh on travel in the coming months, Delta’s president, Glen Hauenstein, said in the statement.
“The recent rise in Covid cases associated with the Omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum resuming from Presidents’ Day weekend forward,” he said.
The airline expects to lose in January and February and to return to profitability by March. Revenue over the three months is expected to be around 72 to 76% of the level in a comparable period in 2019. The airline’s revenue in the final quarter last year was about 74 percent of that in the last quarter of 2019.
Despite a loss in the first quarter, the airline stated that it expects to report a profit for the rest of 2022.
Delta also stated that it made a $208 million profit for 2021. This feat would have been impossible if $4.5 billion in federal assistance was not available to pay workers. The airline lost $12.4 billion in 2020, while it made a profit of $4.8 billion the previous year.
Delta is the first major airline that reports its fourth quarter financial results. American Airlines and United Airlines are expected to announce their fourth quarter financial results next week. Southwest Airlines follows the week after.
Source: NY Times
